Researchers Look at Paths to Entrepreneurial Success

Business School Professors Study How Startups Network

Entrepreneurs use several methods to network and build new companies according to a new study by UMass Lowell professors.

01/10/2012

By Jill Gambon

Why do some startups flourish and others flounder? That’s a question that Manning School of Business professors are trying to answer with research into how entrepreneurs leverage networks ― including physical networks like business incubators or virtual networks like LinkedIn ― to grow their companies.

Assoc. Prof. Steven Tello, Asst. Prof. Yi Yang and Asst. Prof. Scott Latham have been studying how entrepreneurs use networks to raise capital, advance product development or recruit expert help. Their initial research focused on six startups associated with the Massachusetts Medical Device Development (M2D2) Center, a business incubator at UMass Lowell that offers emerging companies lab and office space and help with business development, prototyping, engineering and clinical trials.

Through interviews with the companies’ principals and reviews of the firms’ documents and other materials, the professors began to piece together a picture of the incubator as a gateway to potential funding sources, industry connections, business expertise and other resources. The research showed that the incubator played a critical role in helping the emerging companies build connections to those outside groups.

The professors concluded that being associated with an incubator lends credibility to a startup and that credibility makes it easier for the entrepreneurs to access extended networks of venture capital and angel investors, clinical experts and business and professional organizations associated with the incubator. Entrepreneurs with more highly developed networking skills were able to more easily reach out beyond the incubator to those extended networks.

“Participation in the incubator provides a maturing process for the entrepreneur, both in understanding the commercialization process and also in regard to his or her ability to effectively present the [product’s] concept and the opportunity to potential partners,” says Tello.

The findings are important because they can be used to shape the services offered through M2D2 or other business incubators to help fledgling companies advance their products, says Yang. “We hope our research can be used to better support M2D2 companies to be successful,” she says.

Initial funding for the project came from a grant from the Provost’s Office. The research team expanded their study with a Joseph P. Healey Endowment Grant to look at how startups at other technology incubators in the state are using electronic social networks like LinkedIn to build their businesses. That project is ongoing.

The professors have more recently broadened their inquiry into the arts. Last year, Tello, Yang and Computer Science Assoc. Prof. Guanling Chen received a Creative Economy Award from the UMass President’s Office to study how artist-entrepreneurs use online social networks like Facebook to advance their early-stage creative ventures. The goal, says Tello, is to develop recommendations for entrepreneurs to focus their networking efforts.